on Business Insurance Uncategorized

How Coverage Scope Varies by Industry: Tailoring Directors and Officers (D&O) Liability Insurance to Your Business

Directors and Officers (D&O) liability insurance is not one-size-fits-all. Industry, corporate structure, geography and capital profile all change the types of risks your executive team faces and therefore the coverage you need. This guide—focused on U.S. businesses—explains how D&O coverage scope varies by industry, what endorsements matter most, typical price ranges, and how to tailor policy design for real-world exposures in specific U.S. locations (e.g., New York City, San Francisco, Los Angeles, Chicago, and Delaware-incorporated firms).

Why industry matters for D&O coverage

Different industries generate different claims patterns:

  • Securities and investor litigation is concentrated in technology, life sciences and publicly traded firms.
  • Employment claims (EPL) are common in high-growth tech and retail with rapid headcount change.
  • Fiduciary and ERISA claims arise in companies that sponsor employee benefit plans—typical for large employers.
  • Regulatory claims target financial services, healthcare, and any organization operating in tightly regulated sectors.

Because of these differences, carriers underwrite not only historical loss data but also forward-looking risk drivers—regulatory scrutiny, litigation climate in a state, IPO or M&A activity, and whether the company is incorporated in Delaware (where corporate litigation frequency is high).

Core coverage components (brief)

  • Side A: Protects individual directors/officers when the company cannot indemnify them.
  • Side B: Reimburses the company when it indemnifies directors/officers.
  • Side C (Entity Coverage): Protects the entity for securities claims (public companies) or direct liability.

For more on these distinctions see: Side A vs Side B vs Side C: Which Coverage Matters Most in Directors and Officers (D&O) Liability Insurance?

How coverage scope differs by industry (U.S.-focused)

Below is a concise comparison showing typical exposures, endorsements commonly added, and ballpark premium ranges by industry in the U.S. market. Premium ranges assume standard underwriting for U.S. entities and are inclusive of typical variability by location and corporate size (small private, middle-market, large public).

Industry Primary risks & common claims Typical endorsements/expansions Typical U.S. premium range (annual)
Tech startups (VC-backed) — e.g., SF Bay Area, NYC Securities suits after IPO/merger, fiduciary, EPL Side A enhancement, securities defense, EPLI buy-back $1,500 – $25,000 (private $1M limits); post-IPO: $50k+
Nonprofit / Social services — e.g., Chicago, Los Angeles Employment claims, governance disputes, donor lawsuits Side A, director indemnity, employment practices add-on $350 – $4,000 (for $1M limits)
Financial services (banks, fintech) — NY, Charlotte Regulatory enforcement, securities, fiduciary Regulatory investigation defense, extended reporting, Side C $20,000 – $200,000+
Healthcare providers / systems — CA, NY, TX Regulatory claims, fiduciary, ERISA Regulatory defense, fiduciary overlap, privacy/cyber endorsements $10,000 – $150,000+
Manufacturing / Industrial — Midwest (Chicago, Detroit) Product recalls ripple into governance suits, employment Crime, product-related carveback, Side B enhancements $5,000 – $50,000
Public companies (mid/large-cap) — NY / Nationwide Securities class actions, derivative suits, SEC probes Broad Side C, higher limits, securities/insider trading response $50,000 – multi-millions (size-dependent)

Sources for typical ranges and market behavior include insurer product pages and industry overviews (e.g., Hiscox, The Hartford, and Investopedia). See general D&O product and market notes at Hiscox, The Hartford and Investopedia:

Location-specific considerations within the U.S.

  • New York City & San Francisco (Bay Area): High concentration of public companies, startups and VC activity increases securities exposure and plaintiff bar activity—expect higher premiums and stronger securities-related underwriting.
  • Delaware (incorporation): Many firms are incorporated in Delaware; derivative litigation and corporate governance disputes are commonly litigated in Delaware Chancery Court—this can increase underwriting scrutiny and limit negotiation flexibility.
  • California courts (Los Angeles, San Francisco): Depending on the claim type (e.g., employment), plaintiff-friendly decisions can raise claims frequency and severity.
  • Chicago, Midwest: Manufacturing and large nonprofit hubs; fewer securities claims but more ERISA/fiduciary and employment matters.

Pricing examples and market players (U.S. market)

  • Hiscox is a visible small-business D&O supplier in the U.S.; their small-business D&O offerings can make $1M limits affordable for startups and nonprofits, often with premiums marketed under $1,000–$2,000 annually for very small, low-risk entities (see Hiscox D&O page above).
  • The Hartford and similar middle-market carriers provide tailored D&O for growth companies and nonprofits; marketed premiums for small to mid-sized firms commonly fall between $1,000–$25,000 depending on size, exposures and state operations (The Hartford D&O page above).
  • Chubb, AIG, Zurich are large-market carriers that write middle-market to large public company D&O with broader securities and regulatory coverage; mid-market premia often start in the mid-thousands and scale rapidly for public companies or firms with SEC exposure (Chubb D&O overview: https://www.chubb.com/us-en/business-insurance/directors-and-officers-liability-insurance.html).

Note: premiums vary widely by limit, retention, industry, claims history and whether the firm has prior securities or regulatory claims. Public companies and financial institutions can pay six- or seven-figure annual D&O premiums.

Tailoring coverage — practical steps for U.S. businesses

  1. Start with your industry risk profile
    • Evaluate regulatory scrutiny (SEC, HHS, banking regulators), litigation trends, and employee headcount changes.
  2. Match Side coverage to corporate structure
    • Private firms typically need strong Side A; public companies require robust Side C and higher aggregate limits.
  3. Add targeted endorsements
  4. Negotiate severability and defense provisions
    • Defense allocation between entity and individual can make a material difference in how quickly coverage responds in derivative suits.
  5. Consider entity size and location
    • Location of principal operations and incorporation jurisdiction (Delaware vs state of HQ) should influence limit selection and attachment points.

Checklist: Questions to ask your broker or carrier

  • Which sides (A/B/C) are included by default, and what limits are recommended for our industry?
  • Does the policy include securities claims for private companies with IPO plans?
  • Are employment practices, fiduciary and cyber exposures included or excluded?
  • What are the typical retention/deductible structures for our industry and size?
  • How will claims be handled if the company cannot indemnify officers (Side A trigger)?

For deeper reading on coverage forms and when employment claims are covered, see:

Final thoughts

Tailoring D&O coverage requires aligning policy structure to the specific exposures of your industry and geographic footprint in the United States. Small nonprofits and startups can often secure affordable Side A and basic defense coverage, while financial services, healthcare and public companies need broader, higher-limit programs with specialized endorsements. Work with an experienced broker who understands regional litigation patterns (e.g., NY, CA, Delaware) and industry-specific drivers to select the right combination of Side coverages, limits and endorsements.

External references

Recommended Articles